Ambitious climate change mitigation policies will shift labour markets towards low-emission sectors
The recent OECD paper “The effects of the EU Fit for 55 package on labour markets and the demand for skills” shows that ambitious EU climate change mitigation policies aiming to reduce greenhouse gas emissions by 55% by 2030 will greatly affect labour markets and the demand for skills. The paper calls for effective career guidance to help young people navigate employment opportunities aligned with climate objectives. Further, appropriate education and opportunities are needed for workers who are already employed or who are in the job market; this will also require retraining programmes to properly upskill and reskill workers to better align with labour market needs.
The paper is a first of its kind: it combines a modelling analysis on sectoral employment based on the OECD’s ENV-Linkages model with an empirical analysis of the demand for skills, based on matching labour market changes with information on skill demands from positions advertised online provided by Lightcast.
Employment is projected to be reoriented towards low-emission sectors, such as services and renewable energy, away from other energy-intensive sectors. Job losses are limited by the fact that the most affected sectors (see dots in Figure 1), such as fossil-powered electricity production, are also sectors with a low share of employment (see bars in Figure 1). Overall, total employment is projected to increase by 1.3% by 2030 in the Fit for 55 scenario, compared to 2019. This increase is lower than in the Baseline scenario (e.g. a scenario that reflects current policies and existing trends but not the Fit for 55 implementation). Employment in the Fit for 55 scenario is projected to decrease by 3% for blue collar and farm workers (2% in the Baseline) and increase by 4 5% for other occupations (5-6% in the Baseline). Employment in the Fit for 55 scenario is projected to decrease by 3% for blue collar and farm workers (2% in the Baseline) and increase by 4‑5% for other occupations (5-6% in the Baseline).
The demand for skills will change
Despite the strong growth of jobs in renewable energy production and other sectors that are most directly associated with climate change mitigation – such as wind and solar energy production – these sectors typically account for only a small share of total employment.
Projected changes in the labour market following the implementation of the Fit for 55 policies will therefore affect the demand for skills; not revolutionising it but, rather, reinforcing recent trends (see word cloud below). In particular, projections suggest that changes in employment will result in a sharp increase in the demand for workers who are able to make the most of technological innovations. As a result, between 2019 and 2030 the demand for skills related to interacting with computers, thinking creatively, analysing data and information, engineering and technology will grow.
Similarly, the increase in employment opportunities in service sectors will result in an increase in the demand for workers such as those who:
- Are able to communicate with persons outside an organisation;
- Possess language skills; customer and personal service, administration and management skills;
- Are able to guide, direct, and motivate colleagues; who can establish and maintain interpersonal relationships; and
- Are able to organise, plan, and prioritise work, make decisions and solve problems.
Not surprisingly, because of the decline in labour market opportunities in blue collar occupations and many manufacturing sectors, demand for skills related to operating and maintaining traditional equipment and tools are projected to decline the most following the implementation of Fit for 55 targets.
Investment in education and training is crucial to ensure that the green transition is successful and leaves no one behind
Overall, if countries are to achieve ambitious climate targets, climate policies will need to be accompanied by strong investments in skills policies: education and training targeted at both young people and adults can ensure employers are able to find the right talent and, in turn, that workers have skills enabling them to find labour market opportunities.
Yet, few people in Europe engage in lifelong learning and many of the workers whose employment prospects are projected to be most directly impacted by climate change mitigation policies are unlikely to take part in training and skills development. Developing high-quality training, ensuring that the training provided responds to labour market needs, and ensuring worker participation are therefore key to ensure that the green transition is just and inclusive.
Educational and career guidance programmes should reflect how climate change policies will shape labour market prospects, giving special consideration to the interaction between the green transition interacts and the digital transition. At the same time, whether you are a young adult making educational choices or an adult considering your future employment opportunities, you might want to consider how climate change mitigation will shape overall employment and the demand for skills. This latest OECD work will give you food for thought!
